New Delhi/Mumbai: The Reserve Bank of India (RBI), India’s central bank, on Wednesday announced to increase the policy repo rate by 50 basis points (bps) to 4.90 per cent. The move is aimed at controlling the inflation, which is not ebbing notwithstanding all claims. “The Monetary Policy Committee (MPC) voted unanimously to increase the policy repo rate by 50 bps to 4.90 per cent,” said RBI Governor Shaktikanta Das.
He said that limits for individual housing loans extended by urban cooperative banks and rural cooperative banks, last fixed in 2011 and 2009 respectively, are being revised upwards by over 100 per cent taking into account increase in house prices. It will facilitate better flow of credit to the housing sector, he said.
The RBI Governor blamed the recent spike in prices of tomato and crude rates for the increase in inflation. However, he said that a ‘further cut’ in value added taxes (VAT) by States and Union Territories (UTs) on petrol and diesel can soften the inflation.
According to him, inflation is likely to remain above 6 per cent in the first three quarters of current fiscal. “Our steps will be calibrated, focussed on bringing down inflation to target level,” he said. India’s Consumer Price Index (CPI) based inflation surged to an eight-year high of 7.79 per cent in April. It has been above 6 per cent since January 2022. CPI inflation in April 2022 is the highest since May 2014, when it stood at 8.33 per cent.
The RBI had last month hiked the repo rate by 40 bps to 4.4 per cent. That was the first hike in repo rate since the beginning of the COVID-19 pandemic. India's Gross domestic product (GDP) growth, Das said, was estimated at 8.7 per cent in financial year (FY) 2021-22 as per the data released by the National Statistical Office (NSO) on May 31. For FY 2022-23, Das said the GDP forecast is projected at 7.2 per cent.
The RBI Governor also said that the inflation in FY 2022-23 is projected at 6.7 per cent as the monsoon is expected to be normal this year. In April, the central bank had predicted the inflation projection for the current fiscal at 5.7 per cent. /BI/
